The 2014 CRM Market Leaders

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MIDMARKET CRM SUITE

THE MARKET

The midmarket of CRM is "an area for opportunistic growth" for vendors trying to win over customers, explains Paul Greenberg, president of The 56 Group. While large enterprises have long been proponents of CRM, the "underpenetrated" midmarket includes businesses with two different types of needs. "At the upper end, many of the companies are sophisticated and growing to the enterprise level, and have growing pains kinds of problems," Greenberg says, while the lower end is "coming out of small businesses, which has a different set of needs. There's lot of available real estate in that market."

THE LEADERS

With its emphasis on keeping all of a company's data in one place and getting a "single version of the truth," NetSuite has captured the midmarket and beyond. "NetSuite is a preferred CRM vendor for retailers, manufacturers, and other sectors in the midmarket space, primarily as a result of its powerful connection between front-office CRM and back-office ERP, which utilize the same database as a system of record," says Leslie Ament, senior vice president and principal analyst at Hypatia Research Group. "NetSuite's new focus on CRM at the order level should be on the short list for companies seeking end-to-end ERP and CRM cloud suites," adds Ray Wang, founder and principal analyst at Constellation Research. "Their focus on e-commerce continues to be a good move and distinguishes them from the pack in that growing area," CRM Essentials partner Brent Leary states.

Oracle earned points from Jim Dickie, managing partner of CSO Insights, for its "robust analytics and mobile support," as well as its cloud and on-premises options. He has seen the Sales Cloud become more attractive to mid-tier markets. Rebecca Wettemann, vice president of Nucleus Research, concurs. "We're seeing Oracle deploying successfully on the midmarket level," noting a successful deployment of Oracle Sales Cloud combined with Eloqua (part of the Marketing Cloud) with 20 users that took two weeks to complete. That's the kind of implementation that helped Oracle place on the midmarket leaderboard.

Salesforce.com dropped from the top spot this year. While it has the most brand recognition and strong scores of 4.3 in company direction and depth of functionality, there are concerns about cost, especially for a cloud company. Salesforce.com posted a 3.4 in the cost category, its lowest score. One analyst has heard Salesforce.com customers complain about feeling nickel and dimed by the vendor, with added costs for additional users and features that add up and have had an impact on customer satisfaction. The product itself still draws raves, especially for its open platform. The "AppExchange is a great asset for Salesforce.com users," Dickie says, and its open platform means lots of integrations and flexibility.

The center of the midmarket is "a real SugarCRM sweet spot. This is where they belong," Greenberg states. It's a "good option for companies that want to customize," Dickie observes. That said, Wettemann has reservations about SugarCRM's focus on highly customized products, which makes it more difficult to upgrade to its newer solutions. The latest Sugar UX, with its focus on mobile and ability to pull in contextual information, "moves them further away from being viewed as an open-source CRM vendor to being a CRM vendor who can compete with anybody when it comes to the [sales force automation] side of the house," Leary counters.

THE WINNER

Microsoft Dynamics CRM has a growing presence below the enterprise level, and that forward momentum allowed it to unseat Salesforce.com this year. "The Microsoft partners have done a great job selling Dynamics into the SMB space, and most customers we talk to are happy if not ecstatic with the solutions," Wang states. Microsoft also trounced Salesforce.com in the cost category, with a 4.1 rating to Salesforce's 3.4 rating. Plus, its "new announcement for Office 365, Azure, and Windows 8 integration opens up choices for the customer base," Wang says. Dickie adds praise for its "improvements in interface and mobile support." The leadership of Microsoft and its strategic acquisitions, including that of Parature, gave it a company direction score of 4.2.

One to Watch

For the second year in a row, BPMonline came in as our One to Watch for the midmarket, earning a 4.0 in company direction. The company has drawn praise for its "good workflow support," John Ragsdale, vice president of technology research for the Technology Services Industry Association, states. "BPMonline is doing a great job providing CRM solutions in a rules-based approach. They continue to eat into Pegasystems' business," Wang says. It also averaged a 3.9 in the cost score, and that value matters to midmarket customers.

SMALL-BUSINESS CRM SUITE

THE MARKET

For vendors that cater to small businesses, user education plays a pivotal role. Increasingly, companies that offer CRM solutions for small and medium businesses (SMBs) are building customer-centric cultures, in which employees engage with customers and teach users how to make the most of their CRM solutions. "The demand for customer centricity has never been bigger for vendors of all sizes," Gene Alvarez, Gartner analyst and conference chair, said during a presentation at the Gartner Customer 360 Summit in May. In the B2B market, that demand is particularly high for companies that target small businesses because SMBs have limited resources for outside consultants.

Scalability and price continue to be major factors for small-business CRM suite vendors as well, with customers looking for tools that foster agile development and can grow with a brand, but are also intuitive, user-friendly, and affordable. With tight budgets and high expectations, small businesses want powerful solutions at reasonable prices, and companies that excel in the category offer tools that deliver on both fronts.

THE LEADERS

InfusionSoft performed well across the board, receiving its highest mark, a 4.3, for overall direction, thanks to its continuing dedication to small businesses. "InfusionSoft offers up great small business guidance and support. The company is totally committed to the true small business market, with no intent to move upstream," says Laurie McCabe, IT analyst and cofounder of the SMB Group. Despite "sticking to its space," the company is "gaining lots of momentum," Ray Wang, founder and principal analyst at Constellation Research, adds.

Last year's winner, Salesforce.com, received solid marks but earned lower scores for company direction, dropping from a 4.5 to a 4.1 this year. "There is a lot of confusion among customers when it comes to using the Salesforce1 platform," one analyst says. Still, the company shone, with a 4.3 for depth of functionality, the highest score in the category. "By virtue of its constantly evolving partner ecosystem combined with its Force.com platform, Salesforce.com has developed a recipe that SMBs favor," Leslie Ament, senior vice president and principal analyst at Hypatia Research Group, says.

"SugarCRM is growing in mindshare," Wang says. Returning to our leaderboard year after year, the company earned a 3.9 in depth of functionality and a 3.8 for customer satisfaction. "Its new mobile product and user experience puts it on the map again for competitive solutions in the marketplace," Wang adds.

"A bit less sexy" than its competitors, Zoho is the "best-kept secret in the SMB marketplace," Ament says. Zoho's "highly flexible, budget-friendly pricing" earned the company a 4.6 in the cost category, and its "ease of configuration and robust software functionality" make the CRM solution "short-list worthy," Ament says. "Zoho's Dropbox integration, free email hosting, and cloud synchronizations also make it very SMB friendly," Wang adds.

THE WINNER

No stranger to the leaderboard, Microsoft Dynamics CRM emerged as the winner this year, scoring a 4.0 or higher in every category. "Microsoft's installed base in the SMB market benefits greatly from its OEM agreements with laptop, PC, and tablet companies," Ament says. Its "competitive pricing" plays an important role, too, McCabe adds.

The vendor received a 4.2 in depth of functionality, a testament to a growing dedication to its CRM product. "Microsoft's been investing in CRM," Wang says. "The arrival of [Dynamics CRM Corporate Vice President] Bob Stutz and [President of Business Solutions] Jujhar Singh has led to new life in products, smart acquisitions like MarketingPilot and Parature, and a push toward building the complete CRM experience," Wang says.

Microsoft's new CEO, Satya Nadella, could have an impact on the company's CRM solution too. Despite his non-software–centric vision, Nadella has roots deep in Microsoft's business solutions, and the company's recently announced strategic partnership with Salesforce.com could mean a growing focus on CRM, analysts say.

One to Watch

NetSuite missed the leaderboard this year, earning a 3.5 for company direction—a significant drop from the 4.1 it received in the category last year. "The company is not calling CRM 'CRM,'" Holger Mueller, principal analyst at Constellation Research, says. The company also received a 3.4 for its pricing, largely because it has been "moving up" to work with bigger clients, according to McCabe. "It's becoming too pricy for small businesses," she says.

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